Japan’s Nikkei share average moved between small gains and losses on Monday as investors remained cautious ahead of Nvidia’s earnings later this week, with artificial intelligence-related stocks coming under pressure, Reuters reported.
The market was also weighed down by inflation concerns and continued uncertainty in the Middle East. Investors and analysts are increasingly expecting the Bank of Japan to raise interest rates at its September policy meeting, while Japanese government bond yields edged higher in morning trading.
The Nikkei was up 0.2% at 65,900.95 as of 0156 GMT, after moving between a 0.4% gain and a 0.5% decline. The broader Topix index was up 0.1%.
AI-related stocks, which have a significant weighting in the Nikkei, mostly declined. Fujikura fell 3.5%, while SoftBank Group dropped 3.3%. In contrast, chip-making equipment manufacturers performed better, with Tokyo Electron gaining 2.1%.
Investor attention is focused on Nvidia’s results due on Wednesday, amid concerns over rising costs in the artificial intelligence supply chain. Bloomberg reported on Saturday that Nvidia had informed some of its largest customers that AI server prices could rise by more than 15% because of surging memory costs.
Reuters reported that Nomura Securities equities strategist Wataru Akiyama viewed concerns about semiconductor companies’ profitability, led by Nvidia, as a trigger for selling after a significant build-up in margin trading positions. He also indicated that the broader outlook for earnings growth among AI and semiconductor-related companies remained intact.
However, rising bond yields and growing inflation concerns could make it difficult for Japanese equities to sustain their recent upward momentum, according to the Reuters report.
The prospect of further monetary tightening by the Bank of Japan is adding to market caution, particularly as investors assess the impact of higher borrowing costs on corporate earnings and equity valuations.
